NIO: Observations on the May Delivery Figures

NIO: Dark Cloud Cover with Close Below the 10-Day EMA on Friday May Add A Short Term Bearish Signal

Consumer Discretionary / Industrials

Henry Kwon

Equity Bottom-Up

On June 11, Nio announced that it received European Whole Vehicle Type Approval (EWVTA) for the ES8, which will begin selling in Norway in September, with plans to expand to other parts of Europe thereafter. NIO's shares closed at $45.68 (+6.83%) on the news on Friday.NIO's DNA as a marketer rather than OEM producer is likely to help. In any event, with strong domestic sales and improving financials, there is likely to be little fundamentally based impediments to NIO's share price performance other than valuations or some unforeseen event until 2Q earnings release.<ul>
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Bullish short term share price scenario: NIO broke through its 50% Fibonacci Retracement of $44.08 and 100 DMA of $43.89. If momentum remains strong, shares are likely to try to test its 38.2% Fibonacci Retracement of $49.49 this week.</li>
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Bearish short term share price scenario: RSI is now at 70, a level the shares have not seen since January 12-13 when they reached all-time high. A corrective pullback at this point would be healthy. The 100 DMA and the 50% Fibonacci Retracement which used to be resistance has now become support but if the shares fail to hold this level, the 10-day EMA of $42.18 and the 21-day EMA of $40.22 should be looked to as the next support zone.</li>
</ul>A long term issue that NIO investors may not be recognizing at this point is the challenging nature of European market profitability for Asian brands. However, this is not something that is likely to come into play as a stock theme in the next 3 months for NIO in my view.

On June 11, Nio announced that it received European Whole Vehicle Type Approval (EWVTA) for the ES8, which will begin selling in Norway in September, with plans to expand to other parts of Europe thereafter. NIO's shares closed at $45.68 (+6.83%) on the news on Friday.NIO's DNA as a marketer rather than OEM producer is likely to help. In any event, with strong domestic sales and improving financials, there is likely to be little fundamentally based impediments to NIO's share price performance other than valuations or some unforeseen event until 2Q earnings release.

Bullish short term share price scenario: NIO broke through its 50% Fibonacci Retracement of $44.08 and 100 DMA of $43.89. If momentum remains strong, shares are likely to try to test its 38.2% Fibonacci Retracement of $49.49 this week.

Bearish short term share price scenario: RSI is now at 70, a level the shares have not seen since January 12-13 when they reached all-time high. A corrective pullback at this point would be healthy. The 100 DMA and the 50% Fibonacci Retracement which used to be resistance has now become support but if the shares fail to hold this level, the 10-day EMA of $42.18 and the 21-day EMA of $40.22 should be looked to as the next support zone.
A long term issue that NIO investors may not be recognizing at this point is the challenging nature of European market profitability for Asian brands. However, this is not something that is likely to come into play as a stock theme in the next 3 months for NIO in my view.

NIO: ES8 Gets Certified as a Prelude to Its Norway Entry in September